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Economic liberalization in Egypt: A way to reduce the shadow economy?

Mohammad Reza Farzanegan (), Mai Hassan and Ahmed Mohamed Badreldin

Journal of Policy Modeling, 2020, vol. 42, issue 2, 307-327

Abstract: This study examines the relationship between economic liberalization and the size of the shadow economy in Egypt. We use annual data from 1976 to 2013 and show that economic liberalization policies in Egypt have a statistically significant decreasing effect on the size of the shadow economy as a percent of Gross Domestic Product (GDP). This effect is confirmed for both short- and long-term oriented economic liberalization policies. Based on our results, policies which promote trade and economic liberalization can reduce the extension of the shadow economy in Egypt. Therefore, we suggest conditioning international development assistance to Egypt on demonstrable policy actions with respect to economic liberalization.

Keywords: Shadow economy; Economic liberalization; Time-series analysis; Arab Spring; Egypt (search for similar items in EconPapers)
JEL-codes: E26 O17 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.jpolmod.2019.09.008

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